Guest Post: The Decline Of Self-Employment and Small Business

Small business is the incubator of employment. As it declines, so too do opportunities for first jobs, second chances and economic independence.

Self-employment and small business are two sides of a single economic coin: financial independence. The Bureau of Labor Statistics (BLS) counts two types of self-employed, the unincorporated and the incorporated. The unincorporated may have employees, but typically do not, i.e. they are sole proprietors. The incorporated have employees, starting with the owner, as the BLS counts the incorporated self-employed as employees of their own corporation.

I know that's confusing, but it's important to separate the sole proprietors from those "self-employed" incorporated businesses that have employees: law firms, doctors' offices, accountants, etc.

When we speak of "small business," we're referring in large part to the incorporated self-employed: people who establish corporations as the legal structure for their enterprise.

Nothing is simple when it comes to parsing all the data, of course, but the BLS has a paper that explains the basic categories: Self-employment in the United States (Bureau of Labor Statistics).

The BLS attributes the decline in unincorporated self-employment from 1950 to 1970 to the consolidation of agriculture. As agriculture became more mechanized, small farms were no longer viable and farming required less labor. As a result, many self-employed farmers and laborers became employees or moved to other sectors.

The trajectory of self-employment from 1970 to the mid-2000s tracked general economic growth, which was weak in the 1970s but began a 30-year boom in the early 1980s.Things changed in the recession, as the self-employed ranks have lost 1.6 million from the peak in 2007. The number of self-employed has fallen to early 1980s levels: (All FRED charts courtesy of frequent contributor B.C.)

This chart displays the self-employed as a share of total non-farm employment.The first chart showed a strong rise in self-employment from 1970, but this chart shows that employment rose even faster: the self-employed share of all those employed has been declining for 30 years:

We can attribute this trend to the rise of global Corporate America and government employment. The workforce expanded, and relatively more people became employees of corporations or the government than became self-employed.

It's important to note here that the BLS does not break down the income of unincorporated self-employed: if millions of self-employed saw their net incomes slashed in the recession, the BLS still counts them as self-employed. So a consultant who earned $100,000 prior to the recession and now scrambles to net $10,000 is still self-employed.

This is the statistical equivalent of 6 million people losing full-time jobs and then 4 million of those people getting part-time jobs. Did employment truly recover most of the losses?

This chart displays total non-farm employment (blue) and the incorporated self-employed. Unsurprisingly, the rise and decline of the incorporated self-employed tracks the general economy and total employment.

But once again we have to note the limitations of the data. As B.C. observed, some of the recent rise in incorporated self-employed is the result of tax policies favoring corporations; the newly incorporated may well not have any employees, i.e. they are simply sole proprietors who incorporated for the tax benefits:

Historically, in order for incorporated self-employment to grow, it requires an increasing share of the population that is inclined to, or capable of, first becoming unincorporated self-employed. A growing share of the incorporated self-employed since the '00s are one-person S corporations (to take advantage of favorable tax treatment) or limited partnerships (LPs) and limited liability corporations (LLCs) in real estate for pass-through purposes that hire few, if any, employees.Consider that the US employment base is disproportionately dependent upon the viability of as few as 4% of the labor force and fewer than 2% of the population as the primary "job creators", i.e., incorporated self-employed.

After a brief increase in 2012, the self-employed as a share of total employment is falling off a cliff:

Spend some time walking through Silicon Valley or New York City, and you’ll likely leave under the impression that entre­pre­neur­ship is alive and well in the United States. But spend some time wading through some of the latest census data, and you may come away with a very different impression.

This trend is reflected in the decline of small business in general:

Although many analysts claim most employment growth now comes from corporations, once again we have to look beneath the surface and ask what kind of jobs are corporations creating? More part-time fast-food positions?

Small business plays two critically important and often unrecognized roles. One, it tends to give new workers their first employment experience. The corporate human resources departments are not so forgiving--have you had your third interview yet? Only two more to go....

Two, small business tends to train workers who are then able to move up the job ladder to better paying corporate jobs, having learned the ropes at a small business. If you talk to corporate insiders, they will admit (in private) that their own job training efforts are limited: it's faster and more productive to poach your new hires from a competitor than invest years bringing up new talent.

Corporations may point to their intern program as "job training," but this is all too often a PR facade for unpaid slave labor. How many interns learned anything remotely useful? How many end up with full-time jobs at the company? The typical answer is: very few.

Small business is the incubator of employment. As it declines, so too do opportunities for first jobs, second chances and economic independence.

The age of 'small businesses' is over. If you had argued that we needed 'entrepreneurs' to create new products and services 100 years ago, then you may have had a valid point. But in today's developed global economy, we have international corporations and semi-governmental institutions that take care of all the basic products that we need. Large corporations have now streamlined their processes to such an extent that entrepreneurs are no longer able to compete to provide better quality products. The global economy no longer needs new businesses. What we need now is integration, and a global central governing institution to consolidate global fiscal and monetary policy. This is how we are going to progress as a species.

mdb does seem to be losing his sense of humor... he might need a break or frontal lobotomy... my advice is the same as tom waits: I'd rather have a bottle in front of me than a frontal lobotomy.... take a break mdb... first round is on me

speaking of disclosures...in harford county md., because of aberdeen proving grounds...when you look at r.e...you get a disclosure that says ...there may be bombs buried in your grounds , and pretty much if you blow yourself up by planting a bush etc., we told you so....

Unfortunately, in order for the system you speak of to be credible, there must be a set of laws and contracts that applies equally to all those that live under it. Where is john Corzine motherfucker? Fraud is the status quo, possession is the law and everyone now recognizes that now troll. By the way, the species has been devolving for some time now and the lack of accountability in leadership reflects that very clearly. Black markets are booming. All kinds of small businesses starting in these unofficial markets. The "official" market is now recognized for the scam that it is.

Hell yea. Then all I needed to do was call GE or USFilter to get my 3 quotes for electric drop/box upgrade and sewer line from house to street replacement and fence installation. All of whom said it would be weeks before the jobs could start because of recent layoffs. Of course these are all small businesses that are being stomped by obummercare, increased taxes and regulatory paperwork and fees but don't have a political or lobby ho to get them an exemption. Guess this is because they all "work" as opposed to perform a service,administrative, or breaucratic function with bonuses paid by taxes on real work as opposed to "faux" work.

I think you may be on to something. The Gov/Fed is hollowing out savers by making them use their principal, Obamacare guarantees 35% higher health insurance premiums for selfemployed, who certainly aren't going to hire, large corps are gobbling up small due to NIRP and issuance of junk bonds to buyout the competition, incentivized to buy a labor-replacement machine and getting 100% depreciation on it, this for starters that you are right about this working against self-employed.

All of these companies are connected to the gov in one way or another--the de facto government store.

Now go into a Walmart or one of their competitors and checkout product breadth and depth. You will find that they are both sparse when compared to 10 to 20 years ago. This is a trend that I have been watching develop before my eyes over the years and now the stock levels in some areas are beginning to look more and more like pics of Soviet gov stores in the eighties. Also more and more the Target and Walmart are carrying the same products. Sometimes they have a different brand and/or color or some minor modification, but they are the same.

Is it time to start shooting when we have to stand in line for toilet paper?!

You forgot to mention the benefits of Central Farming. We need to merge all farms into a single mega farm and provide crop guarantees. If there is a shortfall, we can meet it by stocking up in government repositories. The central farm shortfall reassurance repository will be backed by 1 oz of rehypothecated grains. To maximize output we will borrow money from the central bank to buy fertilizers. The more fertilizers we use, the healthier the economy, the higher the output, the better the figures and the safer the food supply. In this way we can eliminate the waste from small farmer trying to grow their own food. This is a wasteful practice and is against what nature has intended. We need to be doing God's Work and unify all fod supply under a Great Leader, who will Take Care Of Us. Yes, I Think We Can. And to monitor the collective property we will use aerial drones, where one command center controls all the drones. Anyone trying to plant a flower in their back yard will be promptly shot at the spot without jury, judge or trial.

Ideally we will centralize the National Central Farms to a Global Central Farm, where all food production will come from a Single Source. All foodstuffs will be tagged with RFID chips to ensure that we allocate and ration the limited output appropriately to where It Is Needed The Most. This will be headed from Brussels by an unelected set of technocrats who have recognized qualifications in the arts and crafts of seeds and plowing from established and recognized institutions with good reputations.

self employment vs robots is not a fair match. Automation is eliminating millions of descent paying jobs each year worldwide. So central banks stimulate/QE etc. to support consumption for the robot factories. But tax revenue is flat and debt levels/central government control increases. Laid off workers try to support themselves with a home business and find that its impossible to compete against automated factories and massive regulation/taxes. So they give up and go on food stamps or disability. So go back to school and run up even more debt.

The Fed is enabling job-killing w/ zero-rates, so the Corp buys a labor-replacement machine they would not ordinarily buy, THEN OBAMA MAKES IT WORSE, giving 100% depreciation at time of purchase. Connect the dots!

It appears to late too send out any "SOS" to save US savers. The American economy is being deliberately destroyed by an inside job being done on it. I think the following article does good analysis of that, although I feel its "solutions" are bullshit, because I think that when one fully understands the magnitude of the real problems, then there are NO solutions. Nobody is going to save the American economy, from the perspective of the majority of the American flesh and blood people. Nothing is going to save US savers ... The established systems are already RUNAWAY SOCIAL INSANITIES!

You touched upon the most important - and least noticed - aspect of the times. Disruptive technolgies are increasingly replacing human effort. It's been happening for 200,000 years but we've reached a new level of sophistication (and increasing daily) that makes it near impossible for a company to compete with mere human power. This, by the way, is one way companies continue profits - replacing the largest expense (salary) with a one-time purchase of a machine.

To add to our troubles, our government is seemingly hellbent on placing as many roadblocks as possible to small job creation. I see nothing to suggest a change in direction, thus it's more debt, welfare and control until..KABOOM

Runaway technology channelled through a social pryamid scheme, so that almost all the benefits go to those who own the machines, while almost nothing goes to those who do not own those machines. Technologies amplifying human capacities by trillions of times is clearly headed towards KABOOM! Since everything that science and technology can do ended up manifesting through the established social pyramid systems, the inequalities are being magnified by many orders of magnitude.

If and only IF political science went through sufficient paradigm shifts, to keep up with those in physics and electronics, and biology, etc., THEN we might be able to adapt. However, for now, all the science and technology is primarily employed to enable people to be better at being dishonest, and backing that up with violence. We have scientific brainwashing, making people become crazier, since the social pyramid systems depend upon the vast majority of people continuing to be ignorant and afraid.

That is the GRAND PARADOX of science, the oldest social science was warfare, but success in warfare was based on deceits. Thereby, the War Kings created the countries that were taken over by the Fraud Kings. Therefore, the advances in technologies have primarily made the social pyramid systems MORE INSANE:

Most of America's self employed would come out financially way ahead going on disability, its an ecnomic no brainer, look at the disability pay & perks versus their income less expenses & less taxes (disability is more way more and its tax free) pretty soon it will be a "no brainer" for millionaires to not work too.

Probably make a funny movie about the last private sector self employed person on the planet.

I am a small business owner. When I was born 40 odd years ago, there were roads, bridges, schools, airports, and many other things I did not build. My parents -- who both worked -- paid taxes and occasionally bitched, but they sent me to public school and helped pay my way through college and graduate school. I am now a small business owner who injects six figures into the economy every year. I would love not to have to pay taxes because it would be more money in my pocket and I strongly disagree with where the taxes go (MIC, a welfare system designed primarily to keep people in line, banker bailouts, etc), but this whole debate about who "built that" is just silly. How about we debate something of substance?

largely agreed until "banker bailouts"...The bailouts should first be known as depositor bail outs (for those above insured limits). The bankers share can really only be regarded as theft. As for the rest of the beneficiaries of our prestidigitator and chiefs bribery for silence scheme I offer the following.

"The penalty good men pay for indifference to public affairs is to be ruled by evil men."... Plato

The problem with Plato's and later Burke's observation was a gross overestimation of both the number and relevance of "good men".

If you think this argument lacks substance it's only because you fail to fully account for the ramifications of building something with stolen funds.

Funny, where I live, there are both roads and bridges which pre-date the governments that now claim to "own" them. Then of course, is the $16T in debt that will still need to be paid for from future production (not that it can). So, what's happening here? Stolen loot and debt is destroying the very environment the infrastructure is allegedly supporting.

If you don't like the "build it" argument, feel free to ignore it, rather than debating the point by dismissing it as not worthy of debate (you might notice how you've invalidated your own wishes by doing such).

Nothing of substance ever gets debated in the public space, because, IF one did, THEN one would begin with the SOURCE of the Money Supply. That would then open a totally TOXIC can of worms, which is no longer allowed to be done, except on the fringes of society, such as within Zero Hedge. So far, the Internet enabling that has still done almost nothing to change anything ...

Every Randist I have ever encountered believes that everyone can be a chief if they just tried hard enough, because it feeds their own ego. The truth is that I'm glad that most people are not as motivated as me because if they were I would be merely average.

Realize whenever you use the term "Randist," it's all of your own design, painting others' who do not wear that label.

If you were at an Objectivist website, it would be one thing, but you're at ZH, where there are plenty of us who are smart enough to understand that Rand became a typical, incoherent agent provacetuer, regardless of the content of her novels.

In other words, she went over to the Dark Side in exchange for increased power and fame. Feel free to go bug true Randists all you like, as they're all as incoherent as she was.

Calling someone "Randist" is as juvenile as declaring opponents of Obama "racist" or gun owners "survivalists" or those who don't give a shit about the FED "sheeple." It's name-calling more appropriate to kindergarten.

Not to mention many Ayn Rand acolytes totally miss the point of her writings anyway - Paul Ryan types who hold up hedge fund managers as some sort of real life Howard Reardons when most of them are the very type of leeches that she (at least in her novels) deingrated. Jamie Dimon and Lloyd Blankfein do not in any way resemble the kind of fictional hero that was her ideal. "Randian" as as useless a term as "conservative" these days, (self)applied by people who completely miss the point.

Taxes are pass-through cost of doing business. Most small business owners under report their income and fail to pay taxes that they are obligated to remit because they pocket it even though its built into their pricing.

Large corporations don't pay taxes--neither do their owners, so I agree with you that these tax non-paying entities are a plague on the productive class: the consumer.

Please spare me the "50% of the population who didn't pay (income) taxes are parasites" BS. Income taxes are not the main source of funds for roads and bridges, gasoline taxes are. And as had as it is to believe for someone like you, the majority of road work is paid out of state and county, not federal taxes. There is no shortage of things to criticize about this absurd adminstration, but beating a dead horse over and over again by taking one comment out of context is not helping. Neither is putting down 1/2 of you fellow citizens as worthless moochers. You are not the self-reliant superhero you think you are.

That 47% of citizens don't pay taxes is a Fox News lie. They don't pay federal income tax because they don't earn enough. They pay plenty of other taxes, however.

Still waiting for you conservative trolls to complain about the mega corporations that don't pay taxes. You know, like ExxonMobil who earns $15 billion, pays no federal income tax, and we give it a refund to boot. These giant companies either pay no tax or pay about 8%, unlike wage earners who pay over 20%.

Wake me when you can complain about them first. Otherwise, shut the fuck up.

Just exactly what has Obama ever built in his life? Apart from coalitions of the strategically aggrieved, or acrimony between people according to his own political categories? In what field of endeavor has Obama ever achieved even bare competence, let alone distinction? Take away his ability to bribe with other people's earnings, his abilty to threaten or slander, and his gifts at demagoguery (equivalent to a complete eradication of individual conscience and replacement with pure egotism) and wherein do we find any qualification for this puerile reptile to comment upon who is responsible for anything?

Obammy and Ben have done a wonderful wax and polish job on what they envision as "their" America. No more shall people be free to conquor their own destiny and eke out a living, it shall simply be given to you by the powers that be, whatever they deem fit for you.

Exactly. When a more reasonable approach would be to simply require businesses to hang a sign indicating whether they had handicapped accomodations or not... and let the consumers and the market take care of the rest.

Own a small restaurant? Better have a half dozen handicapped parking spots, a handicapped accessible bathroom, and a wheelchair ramp or else the lawyer swoop in.

Bingo! That is the correct answer. Georgie the Elder gave us this little piece of "compassionate conservatism" back in his single desultory term. For those too young to recall, there used to be a time when there were no handicap parking spaces and, amazingly, parking lots were not polluted with the crawling disabled facing persecution. No, instead we had a civil society in which younger and more abled people would (without threat of fines to inspire them) park further away, and ordinary citizens or store personnel would undertake to assist people in need. Before the intrusion of the aggressive siphon of totalitarian enforced niceness, we used to have a civilization in progress.

the most dangerous part is this: it does not take a "village" to raise an entrepreneur, but more often than not it takes a family tradition to do so

by favouring big biz over small and medium biz this way, you risk to re-enact the policies against forest fires in Yellowstone Park on the economic plane - but with little to come up again after the Great Fire

My PRIVATE neighborhood pool had to install one. Nobody has a disability in our neighborhood, its never been used, but we were required to have one, in a private neighborhood pool NOT open to the public.

I've been in business for myself for over 3 yrs now. All boils down to one simple question: why in the fuck would I hire someone on the books and have the gov all up my ass when i can just pay my guys with cash or PM's and both parties happy?

I am 100% convinced that CHS needs a third mind, one that heavily discounts the veracity and accuracy of all government reports. Sure the BLS shows self-employment cratering, but they have no measure of the millions (dare I say millions, hell, yes!) of people working off the books, - some part-time, some full-time - skirting all the laws and regulations because... wait for it... THEY NEED TO MAKE MONEY AND PROSPER WITHOUT GOVERNMENT INTERFERENCE.

Governments everywhere, from the feds all the way down to town and villages, are impediments to capitalism and free markets. Many individuals are taking matters into their own hands and just ignoring all the laws, rules and regulations. The suckers are those who have "jobs" allowing the governments to take their money before it even reaches their hands.

Yes, large corporations have ensured a tax and regulatory structure that makes it difficult -- but not impossible -- to operate a small business. How about we get mad at the bribers (large predatory private businesses) and not just the bribed (politicians)?

BERGOGLIO: Please feel free to broadcast this; I don’t want to be pope. Friend, you are a socialist and your friends are socialists. And you are the reason for 70 years of misery in Russia and Europe now is seizing in pain from your policies. You believe in the redistribution of wealth and it makes entire populations poor. You want to nationalize everything and bring every human endeavor under your control. You destroy a man’s incentive to take care of his very own family, a crime against nature and nature’s God. You want social control over populations and incrementally you are making everything against the law. Together this ideology creates more poverty today than all the corporations you vilify have in the history of man.

You believe in the redistribution of wealth and it makes entire populations poor. You want to nationalize everything and bring every human endeavor under your control. You destroy a man’s incentive to take care of his very own family, a crime against nature and nature’s God. You want social control over populations and incrementally you are making everything against the law.

hello? pope pot 'n' kettle arguing? the Catholic church doesn't follow these rules??? how fucking rich is the Vatican, and where did all those monies come from if they're "self-employed"? social control over populations?? wha'??? go to hell laws in abundance, paying penance/alms/tithes/offerings to offset your "sins"? collection plates?? wealthy patrons who get special dispensations??

nope sorry, if this story is true it's hilarious. and that anyone would take it seriously, sans any critical thinking, *shakes head*

oh, and "nature" doesn't HAVE a god - only men have those, in their image. (-ination)

If you talk to corporate insiders, they will admit (in private) that their own job training efforts are limited: it's faster and more productive to poach your new hires from a competitor than invest years bringing up new talent.
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As B.C. observed, some of the recent rise in incorporated self-employed is the result of tax policies favoring corporations; the newly incorporated may well not have any employees, i.e. they are simply sole proprietors who incorporated for the tax benefits:

As our tax laws have become more Byzantine, our society has become less productive and more frustrating.

Explanations are impossible. The govt and corporate ho', may they all be rico'ed', multipy a constant one month, divide it the next month, and leave it out of the equation completely as required, to support their recovery lies. It's all lies.

Well of course it is. If you can get financing for you business to start up good on you, but you still have to meet all the regulations and laws. If you are a first time business owner get ready to get ass rammed by every stupid city/county/state/federal agency attempting to validate why the exist. The gubment is making it impossible for start ups.

I was going to move a family biz into a large city area(ultra cheap rent in big manufacturing building and consolidate w/ current separate biz there etc...) and the city had me face 12 people across the table from various departments, EACH with regulation books that were 2-5 inches thick in regulation, DRiLLING me like I was a freakin criminal. I should have been Mirandized. At the end, the city manager smiled and said they'd really like me to come to the city and create jobs. It was all i could do to tell them to fuck off. I couldn't because I had an existing business there.

And these cities wonder why they have problems? dumb ignorant fucks!

in a past business I built a 70,000 sq ft facility in a small town with no needed regulatory approval. More people should pursue small towns and let the mostly liberal bureaucratic large cities suffer.

Notice the global theme of centralization is bad, and decentralization is needed in every single area, including business, banking, politics..............you name it.

Who says that economic growth was weak in the 1970s and boomed thereafter? The BEA figures (FWIW) don't reflect that.

Sure, people hated the 1970s for its long gasoline lines and rationing. However, the trend to offshore manufacturing was only in its early stages, so the USA did employ a greater percentage of the work force in manufacturing back then.

I've been self-employed - for the most part - since 1982. Built a business in the 80s, grew to 16 employees and then was crushed by a larger (corporate) competitor. Following bankruptcy and about six years in "the wilderness" of the job market, I have been operating happily as a sole proprietor with no employees, for the last 14 years.

One point the author doesn't make directly is that root cause of all of this:the criminality of the Federal Reserve picking winners and losers via money printing (e.g. pumping up stocks to pick public companies over small business). The reality is many Russell 3000 companies would not be able to thrive in this environment if it were not for the Fed buying the indexes via money printing along with the criminal accounting standards boards (e.g. FASB) allowing public companies to cook their books to report earnings when in fact they are simply trading their paper (e.g. selling puts) to juice earnings. Small businesses cannot buy off government officials via stock options (printed paper), they cannot lie about their earnings by buying off government officials, they cannot use “paper” to juice earnings (e.g. selling puts against their stock, then lying about their earnings).

The list of crimes goes on and on and those guiltyof horrible crimes against humanity (e.g. accounting industry, lawyers, politicians, bankers, etc) is wide and vast.And these people are horrible criminals----stealing someone’s labor is analogous to murder as far as I am concerned.Enslaving someone to enrich yourself should be a crime that is dealt with via capital punishment (brutal painful capital punishment); however, in the corrupt United States these crimes are rewarded.In the United States, being a good citizen, being honest, caring about others is met with brutal punishment by the corrupt establishment----the exact opposite of what it should be.

The reality is central planning destroys economies, and even the most liberal, progressive, head in the sand one way thinking academic must understand that when you allow public companies to use accounting fraud to report fraudulent earnings along with corruption via insider trading, government payoffs, lobbying, etc., a false economy that breeds something worse fascism will result. Add to this a criminal Federal Reserve that is basically now in the business of picking winners (large kleptocratic criminal corporations that lobby for it) over the losers (the small businesses that create good jobs and promote a healthy economy) and this is what you get.

Things will not get better as long as the criminals at the private, off-shore banking cartel (Federal Reserve) have the ability to print money and thus buy our education system, our government, and pick winners and losers in the corporate world. The United States has become the most corrupt country in the history of mankind. Sure, it is a very sophisticated form of corruption, but it is the most corrupt nonetheless. Academia lies to keep the fiat money coming to fund their agenda's and this feeds into everything. The media lies to keep the fiat dollars coming, and of course this influences the ignorant sheeple. Government lies to keep the fiat dollars rolling, and this affects everyone. The list of moral hazards goes on and on, but when a small minority can control the population via fiat money that can be printed and dispersed to favored constituencies, the end result is what we are seeing----corruption, fraud, and malinvestment on a scale never before seen in the history of man.

The moral hazards from allowing a private off-shore bank run by evil criminals are far too numerous and complex to detail, but in the end, the solution to the problem is simple: get rid of the Federal Reserve. Since that clearly will not happen, things will only get worse --- more banking, government, and academia crimes against humanity, more "public" companies that use accounting fraud and lies to destroy their competition, and fewer and fewer small businesses and good paying jobs.

I don't disagree that the number of visible small businesses that can be counted has decreased, but I think it is more because many of them saw/see the writing on the wall and bailed. I got fed up with the bullshit of having employees long before Obamacare came along, so I can't even imagine the nightmare that has made things these days.

No, the pernicious meddling of government is destroying everything it touches and pushing legitimate commerce into the shadows.

The credit crunch killed many good small/med businesses. Many businesses lost their lines of credit which killed them. Existing businesses managing seasonal cash flow and new growing businesses that were successful but needed capital to grow and manage cash flow (building higher inventory, plant/equipment etc...) were all screwed. I personally know many that got hit for no real reason.

Small, small business is where it is going, two to three family members behind a corperate veil, beat them with their own expemptions they designed for their corperate masters, at least until they come up wit some bullshit that will cap that escape valve.

About 5 years ago, I started a home-based travel business specializing in sports travel (see your favorite baseball team play on the road kind of thing). Business was good and growing slowly but surely. The first year I made a decent profit from a small but growing client base.........BEFORE gov't licenses, permits, taxes and fees, errors and ommissions insurance, and the cost of my accountant, needed to make sure I didn't forget to dot an I on my tax return, ate away at it.

I was one guy, working out of a bedroom converted to an office, with dreams of creating a booming business, jobs, and financial freedom. The government - fed, state, and local - directly and indirectly sucked it all like a sponge and I learned very quickly that I was to be fist-fucked for eternity if I tried to run a small business in this new age. I had many a sleepless night until I said fuck it and shut it down.

This was before Obamacare was a twinkle in the Left's eye. I can only imagine what keeps business owners awake at night today.

They say if you do what you love you'll never work another day in your life. Not so true anymore.

Laid off with no job prospects = self employed consultant with almost no revenue usually. So you could argue that less self employed is actually positive.

Where I live there is a very large number of small new businesses mostly started by immigrants. They rarely register with the government. Neither do most of the people you can now hire from Craigslist, etc to come to your house and fix your car, etc. The percentage of small businesses that don't register with the government is probably increasing significantly over the last 20 years

If one looks at the US governments actions and not its rhetoric, it is clear that they are out to kill all small business in favor of large corporations. Small businesses do not write laws for the politicians. Small business do not use publicly (really an incorrect name) capital and shareholder funds to bribe politicians. So, it is no wonder that the US government has followed a track of eliminating small competition for the large coporations and killing the mechanism that used to create jobs for people.

Take for example: small banks, small farms, independent physician practices ... all have been under direct attack of the US government and the large corporations. The US government is the largest and most powerful gang in the country. They have the majority of the weapons. They confiscate wealth through taxes... under the threat of the denial of freedom (imprisonment). They provide protection rackets. They simply rig the game at the point of a gun (implied if not overt). If the government had to act through the will of the poeple instead of at the point of a gun, things would be a bit different. It is no wonder that since the US government enforces ITS dictates at the point of a gun that they want to take away the guns of the people.

Its ok, in a few months the thought of being employed will be counted as being employed. Just thinking of starting a business will count as creating a new business along with all the GDP increasing services and products the busness would have created.

As per the household survey, Jim said he thought about getting a job last month, which was good enough for the BLS.

There was a huge surprise in Q4 GDP when it was learned that Morgan from Iowa thought of creating a company that could rival Apple. Yes it is a dream of a six year old elementary student, but Steve Jobs started somewhere. A new ticker was added to the NASDAQ, KQT Kumquat Computer Company, complete with a $400 billion market cap.

I'm self employed and doing all I can to hang on...... I wish I was not a business owner during these times. During the Great Depression, those small biz that hung on became very wealthy on the turn around. It sucks working but getting no pay to prevent closing!!!!!!!!!!!

I retired from software consulting when the vast majority of jobs went to India. This dramatic decline in small startups is yet another way the US is following Europe where business startup is an oxymoron.

See that "surge" in self employment beginning in 2001 thru 2008 or so. Those were the millions in laid off former "tech" workers that began selling real estate/brokering loans/peddling property-casualty insurance etc... all related to the pimped FIRE industry. Many, if not most, of these (I know at least ten of them personally) were contractors/self employed and their incomes from those sources totally dried up. In the last month, I found that one friend who had not sold a home in over 2 years finally got a job as an asst. mgr at a Chilis restaraunt - he is now divorced and filed bankruptcy two years ago. Unfortunately, that didn't do anything for the $100k+ he owes in unpaid back taxes from the "good" years. Also, another recently took a job repairing applicances at a local appliance dealer - he became a personal financial planner in 2003 and that never really took off resulting in bankruptcy in 2006. He now makes $28k per year vs $95k in the tech business ten years ago - he said he had never been happier in his life:)

Funny thing is, neither of these two guys after their initial layoff, would have been included in the "unemployment" landscape due to their "self", but unpaid employment, LMAO.

I can't prove it but many of these were construction and many others were always hand to mouth...able to get loans as long as they could show an exciting new plan to generate growth, and banks need to show new loans, this mini-ponzi proliferated. Game over for both of these. Buy farmland.

In 1995, after experience as a small town personal injury attorney, a government attorney and an associate at a Miami law firm near the top of a skyscraper, rather than hanging out my own shingle as a lawyer I formed an internet based incorporation service.

Which was fine and dandy until 2007. Then new incorporations in Florida (and elsewhere) fell off a cliff.

My legal practice is now varied, and includes a lot of foreclosure defense. I know how to keep my clients in their homes for years using one procedural trick after another. Some may get to keep their homes for good. It's the least I can do to help my clients offset the depredations of a criminogenic Wall Street. Or allow them to match it. I'm not sure which and I'm past caring.

Entrepreneurship comes back when royalty goes away. Right now, we're neofeudal, with individuals facing the stark need to seek the protection of some patron or other in order to get by. Hence they get jobs rather than attempting to succeed on their own. Or, having succeeded on their own in the past, some large concern does something that effectively shuts them down, whether it's Travelocity crushing the travel agent, Wal-Mart eliminating mom and pop competition, or the banking crisis pulling the plug on mortgage brokers, realtors, appraisers, etc.

Meanwhile, those patrons ... those people at the top ... are not called to account by the same laws that bind the rest of us. That is the very definition of royalty. The Constitution is a very anti-royal document, and it is being demonized and those who openly believe in it are openly linked to "terrorism."

Rule of Law. Once it slips away, powers trump rights and the few abuse the many.

I hear you brother. I am in Ohio and have tried my hand at defending some homeowners that were tricked into foreclosure through offers of wonderful new government programs that could lower their interest and forgive principal. I got sanctioned by a judge because I dared to inquire in discovery how the bank structured its incentives, i.e. why were they pushing faux HAMP programs on people who were not in default? I'm done taking on the man in open combat.

Hayek has much to say about the distinction you make between a legal structure that is equal for all, and one that grants certain parties the franchise to determine who succeeds and who fails. Feudalism is an accurate description. The new feudalism is strange in that it is not based upon military prowess, but upon fealty to a set of insane pop-psychology ideas and alumni status. A veritable list of the worst in society is what confers upon one a ticket to the ball.

When negative data like this hits the streets, it is usually only a matter of time before the governments spin doctors get hold of it and we get new data released showing that all is well. Unemployment of 23% gets recalculated at 8%, Inflation gets similar treatment and soon the figures on small business start ups as well if the trend continues. The problem is that even though you can claim that a pig is a bull and get others to agree with you, at the end of the day it is still a pig.

When negative data like this hits the streets, it is usually only a matter of time before the governments spin doctors get hold of it and we get new data released showing that all is well. Unemployment of 23% gets recalculated at 8%, Inflation gets similar treatment and soon the figures on small business start ups as well if the trend continues. The problem is that even though you can claim that a pig is a bull and get others to agree with you, at the end of the day it is still a pig.

Is it just me or do these charts and trends mirror the "workforce participation" charts of late?

Seems if the two are put together the picture becomes clear--you are either on the "dole," work for one of the fascist corporations, self-employed but hanging on by the skin of your teeth (with the ObamaCare kick in the teeth coming) or are languishing in the poverty shadows with occasional menial work.

Sidenote: My description above reminds me of a video of life in Appalachia that I was shown in college about twenty years ago. One was either on the "dole," worked for a big and protected "extraction" (mining, logging, etc.) company, marginally self-employed (trucking, contractor, etc.) but controlled by gov and big companies, or just plain languishing in poverty while occasionally finding work "extracting," hauling or "shining."